The explosions in London shook financial markets across the globe Thursday, sending European stocks to three-year lows, knocking the British pound to a 19-month low and sending oil on a roller coaster ride.

But as investors recovered from the initial shock and no other attacks came, the markets erased more than half of their plunge, while Wall Street limited stock market losses to less than 1 per cent.

Britain's FTSE 100 index closed the trading day down 71.3 points or 1.4 percent lower to 5,158.3, recording its biggest one-day points fall since August 2004.

Early indicators suggested a bad day for North American markets. But by around noon, the TSX Venture Exchange was down just 3.05 points at 1,722.49; the Dow Jones industrials had lost only 20 points to 10,250.82.

Shares of U.S. and European airlines and hotels initially fell, but analysts expected shares to bounce back in the next couple of weeks, since the attacks did not involve airlines and were less severe than the Madrid bombings.

Even stocks for insurance companies did not fall as far as early-day indicators suggested.

The S&P index of insurance companies initially fell 0.8 per cent but recovered somewhat to a loss of just 0.3 per cent. American International Group, the world's largest insurer actually rose 0.03 per cent to $59.15 US after earlier falling as low as $58.52.

As is typical after terrorist incidents, investors flocked to traditional safe havens, buying up government bonds and gold. Futures for gold shot up more than one per cent following the blasts then fell back again, to stand at $426.30 on the New York COMEX market.

Oil prices also felt the effect of today's blasts, but instead of the expected spike in price, they took a tumble from record highs.

The price of oil also soared to an all-time high of $62.10 in early trading Thursday as traders worried about a possible repeat of the economic downturn that followed the Sept. 11, 2001 attacks in the United States. But oil then fell back to around $59.50 in volatile trading.